Novo Nordisk A/S said the supply of its blockbuster obesity medicine Wegovy will continue to be restricted in the US as the drugmaker struggles to expand production.
(Bloomberg) — Novo Nordisk A/S said the supply of its blockbuster obesity medicine Wegovy will continue to be restricted in the US as the drugmaker struggles to expand production.
The Danish company made the comments even as it raised its profit and sales outlook for the year as demand for Wegovy and another related diabetes medicine fuel revenue growth. The stock fell as much as 2.2% in Copenhagen.
The supply challenge is raising questions about whether the drugmaker can stay on top of the wave that’s boosted its market value to about $420 billion — more than Denmark’s gross domestic product — and made it Europe’s most valuable company after French luxury giant LVMH.
Novo’s chief executive officer said the company was rapidly adding capacity to ease the Wegovy supply issues.
“When we look at the US demand it is very, very significant,” CEO Lars Fruergaard Jorgensen said on a call with reporters. “We know that there are many patients who would like to start treatment. We have new contract manufacturers coming in, and that is all being ramped-up, so we will be shipping more and more products to the US.”
Sales are now expected to grow as much as 33%, up from a peak estimate of 30%. Novo also upgraded the guidance for operating profit by 3 percentage points. Wegovy’s revenue surged beyond analysts’ estimates last quarter to 7.5 billion Danish kroner ($1.1 billion), despite the supply restrictions.
What Bloomberg Intelligence Says:
The top end of Novo Nordisk’s raised guidance is already reflected by consensus and may be conservative, though we believe scope for further upgrades hinges on supply of its GLP-1 drugs amid strong demand in diabetes and obesity.
— Michael Shah, BI Pharma analyst
The company also faced manufacturing constraints for its rare-disease medicines last quarter, which it said was temporary but affected sales. Profit and sales fell short of analysts’ estimates in the second quarter.
Novo has vaulted into the limelight thanks to a new generation of medicines that help people shed unwanted pounds by curbing their appetite. A study this week showed Wegovy cut the risk of heart attacks and strokes by 20%, which may aid discussions with insurers balking at the treatment’s cost.
The success of Wegovy and the related injectable drug Ozempic has sparked something of a gold rush in the pharma industry and some analysts predict this class of treatments could become one of the biggest-ever blockbusters. About 40 companies are chasing after Novo to grab a share of the market, led by Eli Lilly & Co., which expects to get US approval to use its Mounjaro diabetes drug to treat obesity this year.
Novo’s stock has more than quadrupled since the end of 2018, overtaking other European behemoths like Nestle. The company also announced plans to split shares 2-for-1 next month.
(Updates with shares trading in second paragraph, stock split in last)
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